I did a brief interview for a public radio program last week and they asked me about people and their ownership patterns of cars and trucks. Specifically, they wanted to know if people were hanging onto their wheels longer and why. Short answer: "Yes."
Americans Continue to Hold Onto Vehicles Longer
The trend we've seen over the last eight years is pretty stark. As new and used vehicle sales in the U.S. have taken a hit in recent years, the chances that we'll hold onto our vehicle for longer periods of time has definitely risen. In late 2001, the average number of months we Americans held onto a new car or truck was 34.2 months. As of September 2009, it was over 60 months. Same pattern, but at different levels, apply for used vehicles, too. Why? How?
- The economy helped this, but it's not the only reason. I won't elaborate on the old news of what a recession does to individual spending in the auto market. But that's not the only contributor motivating you and I to hold onto our vehicles longer.
- Financing. Leasing options were more difficult to come by in 2009, particularly as Chrysler Finance and GMAC withdrew from this type of activity. That hurts the "churn" of someone being able to move from a temporary owned vehicle into another one. Plus, there are more deals out there where you can finance for longer term lengths. You've heard of 72 month car loans? They're growing. That'll add to the average ownership length. I found an article from LendingTree dated 2007 citing the beginning of this pattern.
- Warranties and extended warranties. Automakers are covering their powertrains for longer periods of time and bumper to bumper warranties are also growing. Go talk to a dealer and they'll be happy to sell you an extended warranty as well. Add another factor to my motivation to hang on to 'ol Betsy.
- Vehicle durability is rising. While perceived durability and reliability may be an issue for some brands, consumer research shows that more and more brands are on par with one another regarding their overall product quality ratings. That is a systematic factor allowing you and I to deal with the same set of wheels for a longer period of time.
The trend bodes well for the automotive aftermarket. (Repair business is good - have you checked out AutoZone's stock lately?) It does suppress the annual sales rate for new sales, but if you are a franchised dealer, can you think of a better reason to have for building a customer retention game plan for your service business? I can't.
Posted by Lonnie Miller, Vice President, Marketing & Industry Analysis, Polk
Last week I attended the AAIA Car Care Council—Women’s Board 2010 Winter Meeting at the Rio Hotel & Casino in Las Vegas. I was also honored to participate in a Hybrid Technology Panel to discuss the future of hybrid vehicles and how they will affect the automotive aftermarket industry.
Through the discussion, it became very clear that while hybrids are talked about a lot, they are still very, very young. As of July 1, 2009, hybrids represented less than 1% of the vehicles in operation. However, while currently not that significant, it is clearly viewed as the technology of the future. And, new technologies bring new challenges and that means new opportunities for the aftermarket.
The training available for technicians at this time is still very limited to only maintenance work and since these vehicles are still so new, it is too soon to determine what types of service issues they may be prone to.
All in all, the aftermarket needs to keep an eye on this small, but growing segment. Hybrids don’t appear to be going away, so we need to embrace and prepare for a very promising future.
Posted by Heidy Herrera, Account Representative, Aftermarket, Polk (01.26.10)
So there I was, sitting in my car at a local quick lube establishment, trying to stay awake, when I remembered I needed new wiper blades. I asked the attendant, who checked his stock and sadly told me he did not have blades that would fit my car. WHAT? How could that be? Sure my car is 12 years old...and a model that is no longer being built...by a brand that no longer exists. I still have the car and I still need to maintain it. I need this car, because I’m about to pass it down to my son as his first car. But I digress.
So why didn’t this oil change place have my wiper blades? They should know that there is a 12-year old Geo Prism in the area. It's basic parts and service etiquette! As a Polk employee I was curious to see what our vehicle population database said. So I did some research and there are 1,178 '97 Geo Prisms in the Detroit DMA. And nobody has a wiper blade for them?
But, maybe I'm being too harsh. The idea of stocking up for one specific vehicle is probably unreasonable, especially with all of the automotive industry challenges the aftermarket is currently facing. Yet, inventory efficiency is critical for automotive aftermarket companies. I know because I’ve been very fortunate to have met several companies that have implemented exceptional inventory management systems. These are the winners of Polk's Inventory Efficiency Award. How good are they? Check out their award-winning projects at: http://usa.polk.com/Industries/AfterMkt/videos.htm.
Want a deeper dive? Check out this case study about Uni-Select, a large automotive parts distributor who worked with Polk to develop an e-modeling tool to save their customers time and money. I think you will be impressed.
And hopefully the next time you need a car part—it will be in stock!
Posted by Jeffrey Stone, Senior Marketing Specialist, Polk (11.12.2009)
This has been a difficult year with many automotive industry challenges; consequently, marketing budgets have been cut significantly. I attended EquipAuto 2009 for the fifth time as a visitor, and the second time as an exhibitor. I must say that the show left me with a funny feeling.
Despite rumors of cancellation, the exhibition took place from the 13th to the 18th of October in the North of Paris. The limited number of exhibitors meant that the surface was reduced from six to two halls. I was even more surprised to discover that these two halls were not full. Last minute budget shortages left so many holes, it was like navigating your way through a piece of Swiss cheese. It really was unusual to have such a low turnout of exhibitors, yet the increased visibility worked to our advantage. The attendants could spend time on stands, discussing the technologies and the innovations.
The event included the traditional tooling, servicing and hardware exhibitors showing usual products supported by new sales concepts -- those mainly acting in the independent aftermarket. I've noticed the growing importance of computers in the traditional parts & service industry. The image of the greasy mechanic dressed in blue is quickly being replaced by a clean consultant, checking databases and launching programs to give you the expected answers and service for your car.
I noticed something else different – it seems the first steps are being taken to follow the path required by the many new regulations for environmentally-friendly cars. After years of heavy cars and big engines, we are living through a major change to more efficient, lighter, and safer cars. And to support that, parts and service suppliers brought new things to the table -- new technologies that go along with drastic reductions of carbon emissions. I’m talking about the growing number of dry cleaning solutions, the LED suppliers, the catalytic converters fabricants, etc. Innovations are following the evolution of cars. The more than necessary reaction and adaptation to change within the industry is finally here. It is costly, but the adaptation to the upcoming cars is necessary, especially since the scrappage premiums and the CO2 regulations in Europe are accelerating the phenomenon. Although, the crisis been difficult on the industry, the creativity and innovation remain!
Posted by Bertrand Rakoto, Analyst for Marketing and Consulting, Polk (11.11.2009)
Join me and my colleagues from Polk on November 3rd-5th at AAPEX 2009, located in the Sands Expo Center at the Venetian Hotel in Las Vegas, NV. On November 3rd, Uwe Biastoch and I will present: "The New Global Automotive Outlook—What Will the Recovery in Global Volumes Mean to You?"
The global automotive aftermarket industry is at a crossroads. Challenges of the global economy, reductions in global vehicle demand, the contrast between saturated and emerging vehicle markets, changes to the automotive manufacturing landscape, and new players looking to dominate the global stage... what does all this mean to you? Come hear how the ever-changing global automotive forecast is expected to change our industry in the years to come.
You’ll learn about:
- The economic outlook of the U.S., Europe and Asia
- How new vehicle registrations, production and the global vehicle population are expected to change in the coming years
- How the global aftermarket may evolve in years to come
Meanwhile, Polk will be displaying its data-driven solutions for the global Automotive Aftermarket & Commercial Vehicle industries at the 2009 Automotive Aftermarket Products Expo (AAPEX). Stop by Polk Booth #838, to learn how Polk can help you address some of your toughest business challenges:
- Information Process Management
- Inventory Management
- Forecasting
- Global Vehicle Volume Analysis
- Target Marketing
- VIN Decoding
- Recall Campaigns
- Commercial Aftermarket Demand
- Fleet Profiling
- And More
Click here for more information or to register. We’re looking forward to seeing you there!
Posted by Dave Goebel, North American Forecast Consultant, Polk (10.19.2009)
Listen-up independent repair facilities! Pontiac, Saturn, Hummer and Oldsmobile brands alone represent 15.2 million vehicles on America's roads today. Combined with the closing of many OEM locations and the consolidation of their networks to meet vehicle sales projections, you should now ask yourself, "Who's going to service and sell parts for all of these vehicles?" There is no question that consumers are keeping their cars for a longer period of time, prompting a greater need to pay for parts and service.
Source: R. L. Polk & Co. Market Study: Consumer Sentiment During Challenging Times, 2009.
I don't know too many people who enjoy reveling in the misery or demise of others. I do know how to recognize an opportunity when I see one, though. It's like this time when I was a junior in high school and the kid in front of me on the basketball team went down with an injury. I got my shot, added value to the team and earned some playing time. Did I enjoy seeing him in pain or losing minutes on the floor just because he got hurt? No, but I did relish the chance and take advantage of the opportunity that was presented me.
There is a bittersweet opportunity available to the automotive aftermarket in the near future. For independent repair facilities, there may be an even greater opportunity because studies suggest there are exorbitant differences in parts and labor costs between franchise dealers and independent repair facilities. This is just the type of play that could keep independent repair facilities ahead of the game.
I heard much lament over Cash for Clunkers stealing some of the volume from the automotive aftermarket. Although those concerns are valid, the future is looking brighter. Even though I don't see fireworks and hotdogs on the horizon, I still feel confident calling it "Independents Day".
Posted by Therran Oliphant, Account Representative, Polk (10.09.2009)
I recently had the pleasure of participating in the Automotive Customer Centricity Summit 2009, hosted by Thought Leadership Summits (TLS) in Marina del Rey, California. We heard from some of the most respected thought leaders in the industry on the topic of Customer Centricity – the evolution of automotive CRM. We witnessed how Collier Automotive Group leverages technology to improve the showroom experience. And, the aftermarket showed us how collaboration and vehicle personalization can create not only profitable customer relationships, but can drive brand loyalty by appealing to an individual's need for self-expression.
Tactical efforts to improve customer experience are important. But, I feel that the fundamental challenge in the current automotive industry is its inability to consolidate customer touch points (vehicle purchase, sales satisfaction index [SSI], Captive Finance, warranty, CSI, customer pay service) into a single customer-centric view. Without this singular view, we see customers bombarded with often conflicting messages and offers from the OEM, the Dealer and the Captive Finance source, which invariably drives down credibility and damages the overall brand experience.
More importantly, this often impersonal approach to communication contributes to the defection of retail service customers into the aftermarket as the vehicle ages.
As a result, dealerships are losing share of the aftermarket. According to the AAIA, in 2008, dealerships' share of the automotive aftermarket fell to below 30%, the 6th consecutive year of decline. This not only impacts short-term dealer profitability, but long-term repurchase consideration and loyalty. In today's challenging economic times, dealerships and OEMs can't afford to lose loyalty or vehicle sales. Maintaining customer relationships and customer loyalty to a brand is essential to not only prosper... but to survive. | |  | |
Posted by Patrick Reininger, Vice President of Sales & Client Services, Polk (06.26.2009)
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